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tv   World Business Today  CNN  August 1, 2011 4:00am-5:00am EDT

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i'm zain verjee at cnn london. here are the headlines that hour. u.s. and congressional leaders have struck a bipartisan debt 'agreement. it races the debt ceiling immediately and cuts spending by $1 trillion over ten years. more reductions are set for later this year. the compromise heads to the senate and the house of representatives for consideration but its not guaranteed to pass. more on this story in a moment on "world business today."
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human rights groups are warning that they were struck on monday. troops were sent to hama on sunday to report on terrorist groups. by day's end activists say at least 71 civilians have been killed in hama, the site of huge anti-government protests. on monday is the beginning of ramadan. it's usually the time of good will and muslims fast to show devotion but it's usually high attendance at mosques and many of the anti-government protests have begun after prayers. the former prime minister mubarak's trial has been moved to wednesday. the once untouchable mubarak could face the death penalty for his alleged role in the killings of hundreds of anti-government protesters. those are the top stories.
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i'm zahn verjee in cnn london. "world business today" starts now. -- captions by vitac -- www.vitac.com good morning from cnn london, i'm charles hodson. and a very good afternoon from the hong kong waterfront. i'm andrew stevens, and you're watching "world business today." u.s. lawmakers agree on a deal with just two days to spare. now comes the hard part, voting on it. stocks jump in response. has it done long term damage to confidence. the latest results will show just how deep. so with tuesday's debt limit deadline closing in on them, the u.s. president barack obama and congressional leaders have finally found common ground.
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>> i'd as now that the leaders of both parties, both chambers have reached an agreement that will reduce the deficit and avoid default, a default that would have had a devastating effect on our economy it's only a start though. next comes what could be the biggest challenge of all, getting this 11th-hour compromise approved through the house of congress by tuesday night. o objections are being voiced. even nancy pelosi herself says house democrats may not be able to support it. >> i wonder what the market's going to make of all of this. let's get to the details now. it would extend america's debt limit by more than $2 trillion through to 2012. this would be in two steps. the first extension just under $1 trillion. the second remainder. it's all to be covered by
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federal deficit deductions totally $2 trillion over the next decade. the first round of deductions would amonth to nearly $1 trillion in government spending cuts. le the second would add $1.5 trillion by year's end. these cuts would be determined by a special congressional committee effort. >> charles, what sort of world market reaction have we seen? we've got nina dos santos from london, stan grant from bang bayh shing and kyung ya will be live from tokyo. >> nina dos santos you said is in the thick of things in the city of london, the financial district here. nina, i detect a little bit of caution here. >> caution is the world. optimism is the other one that matches in that sentence.
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of course, chashlgs everybody is cautiously awaiting these votes in the house and also in the senate. there was always some kind of optimism that an 11th hour agreement could be agreed and come to but we should remember that these markets have essentially fallen about 4% last week. many traders here say it isn't perhaps enough to give people the full confidence they need back in some of these markets. we should also talk about the currency as and how they're being affected. charles, you'll note that the dollar has been suffering of lachlt recovering some ground, but we should remember that this is, of course, the world's trading currency. two thirds of the world's trade is actually done in dollars and so a lot of the currency trade is done behind me. that's one of the things that they're going be cautiously looking at. the euro rowe counts for the quarter of the trade. these are the kind of currencies
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that we're going be looking at for a reaction when, of course, we do get some kind of agreement finally being implemented. certainly a little bit of the uncertainty has been removed. we're seeing gold, for example, off by about $14 last time i looked. but i mean there's still a lot of uncertainty out there. mainly hanging over the aaa rating. for example, the u.s. treasury bills, u.s. debt enjoys, what are the people in the market saying about whether that aaa rating could be maintained, nina? >> that's something that started creeping into the forefront of investors' minds. last week people started saying even if we do get an 11th hour deal, it's perhaps not going to make much of a difference to the credit ratings agencies who are already ahead of the curve on this one. it was very interesting to note, charles, just last week we spoke to a number of investors last
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week. he was telling me that u.s. lost its aaa coveted rating a long time ago, so some people say perhaps it's already priced into the market. we should still stress that the u.s. treasuries are trading at lower yields than many other government bonds, even at lower euros. that means despite all of this, they're being the least risky out of these sovereign debt options that people have to invest in. you mentioned gold. the metals trading desk is behind me. they're having a bit of a quiet day, as you can imagine, because people are coming back from their safe havens, gold, for instance, which has surpassed records of $1,620 an ounce, charles, and now they're coming back cautiously into u.s. debt as it seems we're getting a little bit through this. the question is are they going be able to implement this. that's the next thing they're wired about. >> it's very interesting, nina. of course, all of this is usually at times when volume is
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very low in the markets but i imagine there must be a burst in volumes as people have been short on the dollar and that kind of thing. >> yeah. we should mention, charles, that the world's global bond markets often don't get the kind of press that they deserve. they're worth no less than $80 trillion and that might figure they're more than twice as big as the $37 trillion to $40 trillion invested in the world stock markets. just behind me is where they're sitting. perhaps people are going back into sovereign debt. they're really very cautious about all of this. what we're seeing in the united states as much as the euros, it's not just financial. it's a question of politics. sometimes matching what goes on in washington and the markets is often difficult and that's what we're seeing at the moment. >> nina dos santos joining us in the city of laurngs bgc bachdrop
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as it were. she's reporting. andrew. >> it's interesting. it does sound like this has the hallmark for the world's shortest honeymoon for the house and congress. investors are cheering the prospect of an end to the debt ceiling impasse, but still, the markets did close high. take a look at that. that's not a big performance but these are quite volatile markets in asia, so that was the reaction. you have to say if you look at that sort of relatively speaking, that's not really a huge vote of confidence there. there's still caution out there. look at the nikkei up by one and a third. japan, obviously very closely linked to the economy. the hang seng up, shy of 1%. shanghai was flat, 0.10%. we'll talk with stan grant about
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that. sydney, 1.65% higher. a look at currencies around the region, this is where things stand. the u.s. dollar as nina was saying strengthened against the yen. trying to say, though, that one last is about a possible downgrade for u.s. debt. but still the currencies in the asia-pacific region gained against the greenback. reversing a two-day decline. south korea also stronger. that's now a three-year high. this is all pretty tentative stuff still, charles. >> indeed. one country that's been keeping an eye on the messy goings-on is china. beijing is the largest foreign holder of the u.s. debt and sometimes they've been pretty blunt in the way america has handled its finances. with more on that is cnn grant. i can understand why china might follow this with a little bit
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more interest than usual. actually they've been laughing up their sleeves the way the americans with their volted democratic system can't come up with the goods in terms of what will keep the financial markets happy, right? >> you are right about that, charles. there are two sides the political and economic. certainly when it comes to the political side, china never really loses an opportunity to do a little bit of chest beating. editorials here in state-run media accusing the united states of playing a political game of chicken, saying they are politically kidnapping the world and accusing u.s. congress of being dangerously irresponsible. that of course playses to the sense of national lichl here, the sense that people see the emerging rivalry between china and the united states, and as i say, a chance to score some political points. there's also a harsh economic reality.
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it's also shining a light on some of the criticisms of clie -- china's economy. it relies on two things for growth. one is infrastructure. the other is exports. how do they hit the export, that's by keeping china's currency artificially low. they have a big sur plus with the u.s., they hold the dollar denominations, they put that money back into u.s. debt. that allows them to buy more chinese goods. they are tied to the u.s. regardless of whatever political short comings, whatever political modelings they wantet to make out of this. their policy is to buy, hold, and grumble. >> buy, hold, and grumble. the chinese yuan was pretty much
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in line with where it should be. in terms of grumbling, are the chinese expressing any skepticism about the details of this detail or are they not that deep in terms of reaction of what's gone on in washington over the weekend? >> no, we haven't seen that sort of detailed reaction, but what you can say is regardless of the debt crisis, if you want to put it that way or certainly the fear of a debt default there, there are real concerns about some of the underlying fundamental concerns in the u.s. there are concerns that the u.s. has the deficit. they're concerned about the growth that the u.s. is seeing as well. the ratings agency here, which is like moody's, downgraded the u.s. credit rating last year. that was on the back of the second round of quantitative easing and they ended up pumping more money back into the u.s.
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they have to be having another look at the u.s. in the wake of this debt story and perhaps looking at another downgrade again there. so there are ongoing concerns here. it does come back to the point if china doesn't make the reforms that the analysts and u.s. has been pushing for for some time, that is open up more consumption, get it up to around 50% of gdp. if it doesn't diversify its own economy, it is going to be tied to the u.s., regardless of how -- what position that puts china in. charles? >> okay. stan grant joining us live from beijing. many thanks. andrew. >> reporter: the chinese economy is tied so close to the u.s. economy and so many other economies around this part of the world are becoming increasingly tied to the chinese economy. so it's also interlinked at the moment. take the second biggest economy. we're talking about japan.
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it has a huge stake in both china and the u.s., particularly with borrowings. japan is the u.s.'s second biggest creditor. kyung lah is live in tokyo. kyung, has there been any reaction to this deal? >> reporter: we just heard from the finance minister in japan. he's cheering on this deal and is pleased that the deal has been struck. he says, quote, we're expecting that this news will erase anxiety about the future. this is good news. now, the market also cheering it on, though not very loudly. the market closed up at 1.34%. we're also keeping a close eye on the dollar, what the u.s. dollar was doing versus the yen. that his been a very big story here in japan. the weakening u.s. dollar does
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undercut corporate profits. when they ee repate reyated by the big japanese company, toyotas, nissans, and panason panasonics. so they're losing millions of dollar, in some cases hundreds of millions of dollars as the yen strengthens over the u.s. dollar. the dollar did surge versus the yen but on the end of the japanese trading day did basically remain flat. so there is concern that perhaps the underlying fundamentals, there is big concern in japan that it hasn't been corrected but what corporate japan is hoping certainly because we're in the first quarter reporting time for many of these corporations, they're hoping this trend will reverse and that the yen will quit surging versus the u.s. dollar.
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andrew? >> reporter: kyung, we hear a lot. are you sensing that japan is getting more frustrated now because of the economic problems and is japan more likely to become aggressive to get the u.s. to try to clean up its house? >> reporter: well, what we're seeing is two different reactions. the japanese government really does align very closely to the u.s. government, but there is certainly a feeling, a sent meant among the japanese government that the true ee alt here is that the economic brevity is shifting away from the united states and east and china is the key player, but the other reaction is what is corporate japan doing? corporate japan clearly understands that to stay with the u.s. dollar, to stay with the u.s. customer, especially when you look at the very clear figures out of the united states is certainly not going to bode well for them in the future. so this is this sentiment among
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corporate japan that they have to at the economic realities here, that what they're seeing, especially with the political crisis in the united states, that perhaps the emperor has no clothes and someone should start acknowledging that. >> indeed. okay. kyung, thanks so much, joining us live from tokyo. charles, have you been taking a look at what the u.s. futures are doing? >> absolutely. i think slightly less caution, if we look at the numbers here, reflecting the fact that clearly these are the markets that have been most oppressed. so we're looking at bonds up to 1.5% in the case of the blue chips, dow 30. only around 1.26% for the s&p 500 and 1.37% for the nasdaq co composite. certainly an amount of enthusiasm. but one wonders if some of the
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caution that we're seeing in europe, andrew, isn't going to spread to the united states by the time wall street opens in u.s. time. >> reporter: yes, look at numbers. they're certainly out of sync. certainly caution being expressed by reporters and analysts pretty much around the world. so we've got what looks like enthusiasm at the moment concerning america's pending debt deal, but as i say, son analysts are questioning whether the cuts will make a accident in the $14 trillion debt. we're going to take a deep leering at the plan's impact in just a moment. is loaded with vitamin c. and now, b vitamins to boot. coffee doesn't have fiber. unless you want it to. get more with new splenda® essentials™, a small boost of fiber, or antioxidants, or b vitamins in every packet. same great taste with an added "way to go, me" feeling. new splenda® essentials™. get more out of what you put in. look in this sunday's paper for a three dollar coupon.
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any questions? no. you know... ♪ we're not magicians ♪ we can't read your mind ♪ ♪ read your mind ♪ we need your questions ♪ each and every kind ♪ every kind ♪ will this react with my other medicine? ♪ ♪ hey, what are all these tests even for? ♪ ♪ questions are the answer ♪ yeah ♪ oh one of the key bellwethers for the appetite in the global crisis is gold. gold down today as you see there. a loss of $10.85 per ounce. it's trading at $1,615.55. so a little bit manufacture risk
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back on the table. welcome back from hong kong in london. you're watching "world business today." now, both houses at the u.s. congress must still approve the debt limit deal that president obama and congressional leaders hammered out over the weekend, but despite the $2.5 trillion in spending cuts that it mandates, that's the headline, it may not have a lot of impact on u.s. debt. cn anchor john defterios joins me in london to explain why. $2.5 trillion might be headlined, in fact. >> reading between the headlines, what they have on the table is a trillion dollars over ten years. so e we're looking at cuts of $90 billion. the remainder, 1.4, 1.5, is going to be passed on a super committee to get it done by christmas time before the christmas holidays. it's not really 2.4, 2.5. >> that's kicking the ball into the long grass.
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>> if markets were to get cuts of $4 trillion to $5 trillion of this deal so the expectations are almost cut in half, and, in fact, they only have 900 of the 2.4, 2.5. let's look at the realities. this is why the market has trepidation. the debt to gdp is still expected to stay between 97% and 102%. look at the budget deficit of gdp. 10.7%. the reality is you feel comfortable because the debt ceiling has been raised but it's not a great story for the u.s. you're raising the debt to $16 trillion. it's not going to dent the debt to gdp. they're saying if, in fact, you've got $5 trillion in cuts by 2020, the long-term debt would be 7 p 5 to 80. if you cut that in half, this number is very likely to stay the same over the next ten years. >> let's get to the politics of it.
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basically who won? we're play gaming -- game of cheeking. who went first? >> the bush tax cuts will remain right now. he, in fact, the tea party folks gave up something in terms of what they wanted to do because they had to give up the debt ceiling increase. that's kicked out well past the election year 2012. so the debt ceiling -- this went to the democrats, the tax increases that obama was looking for to close the gap, went to the tea party people. so you ended up with something that's extremely watered down. >> yeah. although, as it says in "alice in wonderland," all have won and all shall have prizes, at least according to your analyst. in looking at that, what's crucial to any budget calculation is the budget that underlines it in terms of growth. as we learned last week, growth in the united states economy is anemic and might remain so for some kind. >> yeah, i think we should look back for the last 20 years.
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if you go back to the 1990s and look at america's stalling growth nrk the 19850s they had growth of 3.1%. it carried into the 1990s at 3.3%. and then 1.7%. as you suggested in the second quarter, it was a very anemic growth of 1.3%. the economists i'm speaking to are saying basically for the rest of the decade you're seeing growth of around 2%. when you don't have growth, you don't have tax revenues and the gdp budget is likely to say the same. this is the reality of the tilt to the east. unemployment, 9%. people have been out of work on average 40 weeks before they can find a job. that's the worst since record keeping since 1948. it's not a very good story. it gets us past the crisis but the long term doesn't look very promising. >> and the aaa status, i wouldn'tle bet on it. thank you very much, john defterios.
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andrew. >> reporter: charles, even after that, there's another angle to this story as well, another angle for lasting damage. when we come back, we're going to be looking at the rock solid deference that we had in the u.s. economy, particularly global investors. well, that might now be undergoing some changing. we might explore that angle in just a moment.
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welcome back. you're watching "world business today" live on cnn.
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>> charles, it's a pretty balmy scene down here. it's a beautiful clear day. hot, but nice and clear. if you look a few thousand kilometers north, there's a severe tropical cyclone bearing down on japan. let's go to ivanka brar wra in the weather center with more on that story. >> it's going to reach the islands here in a short period of time. woe don't have much time to prepare. we're going to watch it closely. it's been moving rather slowly but it's going to begin to pick that up. look at the winds now. 220-kilometer per-hour winds. it was a significant typhoon. it's a cat 4 at this point here. as far as tracking it, what's going to happen in the next few days. it had been moving due north in the last 48 hours and now it's going to make that dangerous turn to the westful if you're
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watching from mainland japan, it's okay. but here at the okinawa islands it does not look good. it's going to maintain its strength at 212- 214-kilometer per-mile winds. perhaps the secondary landfall into shanghai. here's computer model forecast here. a tightly wound eye. we continue to see nothing impeding its development here. it us at least going to maintain strength and perhaps fluctuate up and down over the next couple of days. as it does. this thing is finally getting together. what i'm showing you is the tropical disturbance of the eastern atlantic here. this will be emily. it will be a tropical storm. it will be impacting with the lesser antilles here and eventually moving south of puerto rico. what it does after, that we think it's going to move
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generally west toward hispaniola and potentially by the time it gets to day five, it could be a threat to the eastern plains united states. we'll keep you posted on muifa in future days. guys? >> okay, ivan. thanks very much for that. the new imf chief has chilling words if the united states. she says the world's confidence could be slightly eroding. then we'll speak life with analyst luis cooper. s
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hodson. and i'm andrew stevens. by victoria harbor here in hong kong. welcome back. you're watching "world business today." the hard bargaining is now over, but now it's all about getting votes. even as u.s. president barack obama was announcing, he was -- sorry -- announcing, he and congressional leaders had reached a deal to reach the nation's borrowing limit and slash spending, house speaker john boehner was trying to convince house members to actually support it. now both houses of congress are expected to vote on it on monday. there's a live picture of capitol hill. the bipartisan committee will also be required to come up with another $1.5 trillion in cuts. it would also lift the government's borrowing by $2 trillion in two steps. long-term damage may remain. the once unshakeable faith that
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the world has put in the u.s. economy may suffer a crisis of confidence. well, we put the idea to the international funds new imf, christine lagarde. >> it was a positive buy kwas toward the united states of america, toward treasury bills. that was the case historically. and the current crisis is probably chipping into that very positive buyers, that very strong confidence that generally led to flight, equality, and investment in treasury bonds. it's slightly eroded at the moept. i mean it was unheard of only six months ago. to imagine that the united states could be under negative watch by the rating agencies. >> does that mean that the dollar's role is the reserve currency of the world, which provides the united states with
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ee nor mess worry, lowering the interest rate, is that also, you think, potentially in darjer? >> it has been one of the assets of the united states of america. what the former president of the european kunly called the skpor bant privilege of the u.s. dollar. that's what's at stake. i'm not suggestions that it's going to change overnight because the currency evolutions take time. if you look at the time that industrial revolution was over and europe had gone through massive wars, that took time. but gradually it's roaded. >> and in 19 -- >> those things can happen. >> and in 1945 one day it was over for the sterling and the dollar replaced it. >> yep. >> well, of course, time will tell how much damage the u.s. has done to its prestige.
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louise cooper joins us from london. financial brokerage with operations on six continents. just to put it theover way, what we've seen in washington over the past weeks and months has been a political choreography and the behavior of the politicians hasn't changed that much. why are we so upset? why are we saying it's a great day of doom for the economy when actually they agreed on the deal, it took a while getting there? >> the deal isn't done yet. obama said the leaders of the republican and democratic party have agreed to the deal. now they have to sell it to the rank and file members. we've got these two important roles today through the senate and house of representatives. those votes have to come through before we have a deal. the deal isn't there yet. that's possibly why the markets -- equity markets are only up 1% so far. there's still some concerns that
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the tea party republicans could not vote for this. so, you know, the s&p 500 in the state, the u.s. equity market was down 3.9% last week. it's only rallied about 1%, 1 president 5%. if people really thought this deal was done, equity markets would be a lot higher. they're not. we need to watch this space. >> point taken. we're looking at 1 to 1.25% gain. leaving that aside, the issue of the short term markets, only the assumption that there's going to be a deal and it all goes through twaktly as state, will there be a long term damage to the status of currency? >> i can't believe that there won'tet be damage. i look at the dollar, and, actually, yes, it's been very weak, but nothing extraordinary against, say, the euro and the
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pound compared to livls, three, six months ago. yes, u.s. treasuries sold off but they're still very low levels compared to the last ten years and if you look at the equity markets in the states, it's actually performed pretty well. so i don't think an awful lot of fear or risk has been priced into the u.s. equity market and u.s. assets. but i think you're right. i think this will leave a lot of international investors to reassess the u.s. and it might mean all the u.s. denominated assets may not be quite as possible as they have been in the past. that would be my view. >> but they're already losing their popularity, aren't they? we're already seeing the chinese buy more -- heaven help us -- euro-zone bonds, the safer ones, one assumes. clearly a lot of people are buying yen at the moment. in a way, this is certainly a
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way to consolidate the process which has probably been going on for some time, hasn't it? >> i find it quite interesting. i was looking at my machine earlier. still china owns 24% of all u.s. treasuries, of all u.s. government debt. that is an extraordinary amount and it has really meant that america could live beyond its means for a very long time. and think we need to look very, very carefully at signs coming out of beijing as to whether the chinese are willing to continue to do that. >> okay, liouise cooper joining us live from london. let's pick up on a point that louise was making about a relatively tepid stock market reaction, and in termses of the european market, this is the case. it's less than 1% for the dax and the paris cac 40.
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they were up. it's like traders have been reading the fine print and listening to each other and talking to each other and not quite so impressed as once they were perhaps an hour ago or maybe even half an hour ago in terms of trading here. only the ftse is up by more than 1%, andrew. >> yeah. here in asia, a positive reaction but i suspect it was much more of a knee-jerk reaction. the initial news, the announcement by the president -- japan had been open for 40 minutes when the president made the announcement that the deal had been done. we hadn't seen the details or the analysis done. it meant -- as you say there, that's how the markets ended up. again, that's not a big jump for this part of the world at all. again, nikkei up 1.34%. shanghai climbing up. there's still no word on the
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banking situation in shanghai. on a much broader issue, china is watching this debt deal so, so closely as the u.s. is being accredited. as i said, not a particularly strong day here in asia considering the headline initially was a deal has been done. well, there's also a worrying employment outlook for the u.s. and it won't be made any easier bey an announcement we're expecting from one of the world's biggest banks. still ahead, we'll look at what shake-ups hsbc is planning as it reports its profit for the first half of the year. you're watching "world business today."
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any questions? no. you know... ♪ we're not magicians ♪ we can't read your mind ♪ ♪ read your mind ♪ we need your questions ♪ each and every kind ♪ every kind ♪ will this react with my other medicine? ♪ ♪ hey, what are all these tests even for? ♪ ♪ questions are the answer ♪ yeah
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♪ oh welcome back to "world business today." with giant banking group hsbc has just announced in the last few minutes or so it's going to be laying off at least 5,000 employees worldwide as part of the company's efforts to cap costs over the next three years.
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some reports are putting that layoff number much higher at the moment. at the sam time hsbc is also boosting its revenue, it's shifting from retail banging to corporate banging or investment banking. let's go to ramy imocencio. what do they look like? >> the pretax profits came in. that was about $11.5 billion for the first half of the year. this number is up about 45%. the expectation was for pretax profits. so this number here is higher by about $600 million. this is some really good news that hsbc really needs. since early january, the company's share price has actually tumbled from here down by about 7%. and investors have been worried that this slide is because of less than stellar performance in some countries in which hsbc operates. so there's a reorganization in the works to cut spending and to
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increase revenue. and moving forward, the ceo wants them to play out retail and play up corporate bank. in terms of saving money he wants to cut costs and he wants to cut costs by $3.5 billion by 2013 and he's going do that in part, as you mentioned, by cutting at least 5,000 jobs around the world. this southbound 1.5% of hsbc's global work force, a bit mar more than 150,000 employees in total. he's going to shift it to faster growing markets in order to boost the revenue as you mentioned. for example on sunday hsbc announced it would actually sell off nearly half of all of its u.s. branches, mostly in new york, for about $1 billion. also hsbc is pulling out from the retail industry in russia. then they're going to be looking for growth from other places in latin america, for example, specifically in mexico as well
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as growth in europe and turkey. no surprise to anyone, in china. hsbc says it's going to add 2,000 jobs to its current labor force. with the layoff announcement on the back of this better than expected report, we're seeing the realignment hsbc has been talking about. it still has a way to go. the plan will take it through 2016. >> thank you very much. ramy imocencio there. charles? coming up on "world business today," selling something chinese to china. we'll tell you all about a case in which the roles are reversed in u.s./china trade relations. that is next. ♪ sing polly wolly doodle all the day ♪
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♪ hah
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welcome back live from cnn hong kong and cnn london, this is "world business today." many americans are wary of the products that china ships to the u.s. they're also worried about the overall economics, particularly the trade between them. he's making chopsticks and selling them to china at the rate of some 4 million a day. john vause has the story. >> reporter: jay li knows better than most the art of the possible. >> everybody says are you
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chopsticks. >> reporter: that's 600 chopsticks a minute, 2 million a day. his factory is running nonstop, six days a week. >> did you ever think you knew so much about chopsticks? >> no. >> reporter: jay was born in korea, moved to the u.s., tried a few businesses and saw his chance. the chinese use a staggering 45 billion pair of disposable chopstick as year and they're running out of wood. it turns out georgia's poplar trees are soft, strong and grow like weeds. >> the bank wouldn't loan you any men for this? >> no. >> reporter: what did they say. >> they say your company will file bankruptcy. >> reporter: he borrowed from
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family, got a local partner and invested a mill in a small town. hired almost a hundred people. >> we have about 4,500 applicants so that tells you how the economy is around here. >> reporter: it's bad. a lot of manufacturing jobs in this town disappeared years ago. unemployment is 14%. in the next few weeks, production here should hit 4 million chopsticks a day. that's the break even point for the company, and as it happens around the same time, china will ship to california the last of 12 segments of the oakland bay bridge, a $7 billion construction project. the shanghai company has never built a bridge before. another big step by china up the global economic latter from toys to ipods and now on its way to joining the elite of civil engineering. so is this a sign of just how much the u.s./china trade
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relation has changed. the chinese build bridges, americans make chopsticks. >> countries should do what they're good at. right now china is good at making bridges. the u.s. is good at a lot of didn't things. >> reporter: including, it seems, making chopsticks and selling them for about a penny a pair. but there is real satisfaction here that somehow the tables have turned, that america can sell something quint essentially chinese to china. john vause, cnn, america's georgia. >> and that's it the for this edition of "world business today." great story. i'm andrew stevens in hong kong. >> and i'm charles hodson in london. you're watching cnn, the world's news leader. good-bye for now.
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